UK-based insurance giant Aon plc AON announced an agreement to acquire Admix –– a leading health and benefits brokerage and solutions firm in Brazil.
The company is looking to reap growth opportunities from the steadily growing private health insurance market in Brazil with this buyout. The partnership with Admix will deepen Aon’s reach in the region by doubling its presence over there. It will also help Aon to better serve clients in Latin America and around the world.
The company is optimistic about spreading in Brazil which is considered one of the most lucrative healthcare markets in Latin America. Better standards of living are pushing up healthcare expenditure in that country.
Aon has been upfront in adopting inorganic growth strategies like acquisitions and partnerships. Last month, the company agreed to acquire cybersecurity specialist Stroz Friedberg Inc. which provides insights to help insurers expand and create new cyber offerings.
Last June, the company tied up with AXIS Insurance, a business segment of AXIS Capital Holdings Limited. The deal will allow Aon's Architecture and Engineering (A&E) Advantage program to provide professional liability insurance to architecture and engineering firms with billings of up to $7.5 million, thereby enhancing its professional liability portfolio and paving the way for more client acquisitions.
In Aug 2014, Aon Risk Solutions acquired a Lima, Peru-based Grana y Asociados. This is a provider of comprehensive advice and professional assistance for risk management to individuals and businesses globally.
These acquisitions have been supported by the company’s smooth cash generation from operating activities. For the first nine months of 2016, cash flow from operations increased 14% year over year to $1.48 billion and free cash flow increased 24% year over year to $1.3 billion over the same time period.
We expect to hear news of further acquisitions from the company given that it continues to generate cash flows which helps it fund its purchases. The company expects to deliver double-digit free cash flow growth in full-year 2016, reflecting further progress in its near-term goal of $2.4 billion of free cash flow for 2017.
Aon carries a Zacks Rank # 3 (Hold).
Investors may consider players like Alleghany Corp. Y, Arch Capital Group Limited ACGL and First American Financial Corporation FAF. Each of these stocks carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alleghany delivered positive surprises in three of the last four quarters, with an average beat of 20.52%.
Arch Capital beat expectations in each of the last four quarters, with an average beat of 9.27%.
First American Financial delivered positive surprises in each of the last four quarters, with an average beat of 14.32%.
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